Ag Market View for May 8.23


The soybean complex was mostly lower with soybeans off $.03 – $.08, soybean meal was up $1 – $2, while oil was 60 – 75 lower.  Money managers were net sellers across the board in the soybean complex.  While the MM combined position is still long just over 93k contracts, this represents their smallest position since Oct-2021.  US soybeans remain a $80 – $85/mt premium to Brazilian supplies thru July.  Export inspections at 15 mil. bu. were in line with expectations.  YTD inspections at 1.758 bil. are steady with YA, vs. the USDA forecast of down 7%.  Only 2.5 mil. bu. were destined for China.  I look for US exports to be cut 10 – 20 mil. bu. in Friday’s WASDE report.  Brazil exports for May-23 are expected to reach 12.1 mmt, vs. 10.3 mmt in May-22.  According to Safras & Mercado sales for the 2022/23 Brazilian soybean crop have only reached 51%, below the 61% from YA and 5-year average of 67%.  I look for US planting progress to have reached 35–40% vs. the historical average of 21%.  Moving average resistance and cheap Brazilian supplies will likely limit July-23 soybean rally attempts to the $14.60-$14.75 area.  Expectations for another net modest decrease in SA production (Argentina down 2-3 mmt, Brazil up 1 mmt) should keep July-23 supported on dips under $14.00.  Ultimately US weather and Chinese demand for US soybeans will drive new crop Nov-23 values.  With drought areas shrinking I suspect Nov-23 will make another run at the Mch-23 low just under $12.50.           

Canola fields


Nearby corn was steady to $.03 higher, while deferred contracts were $.04 – $.05 lower.  Money managers were net sellers of 103k contracts of corn last week, extending their short position to 118k contracts, their largest short position since Aug-2020.  US corn remains $20 – $25/mt premium to SA supplies.  Export inspections at 38 mil. bu. were below expectations and below the weekly pace needed to reach the USDA export forecast of 1.850 bil. bu.  YTD inspections at 979 mil. bu. are down 35% from YA, vs. the USDA forecast of down 25%.  Only 5.5 mil. bu. were destined for China.  I look for a 25 – 50 mil. bu. reduction in the USDA forecast in Friday’s WASDE report.  Safras and Mercado est. 24% of Brazil’s 2nd corn crop has been sold, behind the 31% from YA.  I look for US corn planting progress to reach 50–55% thru this weekend, ahead of the historical average of 42%.  I’m eager to see if the USDA adjusts feed/residual use in Fri. WASDE report.  Recall Mch 1st stocks were 80 mil. bu. below expectations.  I look for slightly lower exports and ethanol usage to be offset by higher feed usage, leaving stocks near unchanged at 1.342 bil.  July-23 today failed on its attempt to trade back above the $6.00 level.  Next resistance is the 50 day MA, currently $6.16 ½.  Dec-23 has been pressured in recent weeks on anticipation the USDA will show new crop production above 15 bil. and stocks growing to 2.0 bil.+.  Until a weather problem exists it’s tough to argue for significantly higher new crop prices.   


Prices did benefit from lack of progress on extending the Black Sea Grain Initiative despite weekend negotiations in Moscow.  According to Ukrainian officials Russia has effectively ended the grain deal early by refusing to register incoming vessels.  Officials from all parties have agreed to meet again this Friday to continue negotiations.  Prices were mixed with KC up $.09 – $.11, MGEX up $.05 – $.08, while Chicago was $.04 – $.06 lower.  With today’s close July-23 KC has recovered over 70% of the $1.50 drop from the April highs to the May low.  July-23 MGEX traded above its 50 day MA resistance of $8.50 ¾ before pulling back.  Money managers were net sellers of 13,300 contracts of CGO wheat extending their short position to just over 126k contracts, their largest short position since Jan-2018.  Export inspections at 8 mil. were at the low end of expectations.  YTD inspections at 678 mil. bu. are down 3% from YA, in line with the USDA forecast.  I look for spring wheat plantings to have reached 33%, just below the historical average of 38%.  Look for another 2 – 4% improvement in G/E ratings for winter wheat. 

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